R SRINIVASAN Vs. R NATARAJAN

JUDGEMENT

(1.) This revision is filed against the order in I.A.No.46 of 2001 in A.O.P. No.10 of 2001 dated 29.10.2001 on the file of the Sub-Court, Uthagamandalam.

(2.) The petitioner filed A.O.P.No.10 of 2001 under Section 9 of the Arbitration and Conciliation Act (hereinafter referred to as 'the Act') as follows: The petitioner and the respondents were the partners of Niton Tea Company as per the Partnership Deed entered into in the year 1972 and the partnership was constituted to carry on business in manufacture of tea in the name and style of Niton Tea Company at Kothagiri. In pursuance of the partnership deed, each contributed a sum of Rs.4,25,000/- and the business was carried on for about five years and the second respondent was the managing partner. Since he could not manage the affairs of partnership properly, the entire business of the firm came to a grinding halt and the Company became defunct for a period of more than 10 years. The electricity supply was disconnected for non-payment of consumption charges due to the mismanagement of the firm by the second respondent. To revive the business, a fresh Partnership Deed was entered into on 25.02.1987. In December 1997, it was mutually agreed that the respondents would relinquish their right of partnership in favour of the petitioner and the petitioner was directed to pay Rs.56,25,000/- as consideration to the respondents out of which Rs.30 lakhs is payable within a period of one year, provided the business of the Tea factory is revived effectively. Though the petitioner invested Rs.22 lakhs and the Central Excise also granted licence on 22.9.2000 and since further amount is required, the petitioner was requested to give his personal property as security towards payment to the respondents. It was also agreed that arrears of electricity consumption charges, Central Excise, property tax and other arrears of taxes have to be shared between them. It was further agreed that after revival of business in the factory, the respondents would execute their retirement deed from the partnership firm in favour of the petitioner and such settlement was arrived at as per negotiation made by their brother-in-law B.Shanmugam, Advocate of Pollachi, who kept all the originals with him and directed them to comply with the conditions imposed on them. After expiry of the said Shanmugam, the original letter executed could not be recovered. The petitioner was ready to pay the agreed sum to the respondents and they are not willing to receive and execute retirement deed. The petitioner has also filed necessary documents as stated in paragraph 4 of the petition to show that he is in possession and enjoyment of the properties belonging to Niton Tea Company pursuant to the arrangement entered into between them. Therefore, the petitioner has filed the above petition under Section 9 of the Act since the Arbitrator cannot give relief of injunction restraining the respondents from dispossessing the petitioner. The petitioner also filed I.A.No.46 of 2001 seeking interim injunction till the disposal of the main A.O.P.

(3.) The petition was opposed by the second respondent in the counter admitting the formation of partnership in the year 1972 and denying the allegation of mismanagement of the firm by him. At the instance of mediators, it was agreed on 12.12.1997 that the value of the business together with factory, building, etc. was fixed at Rs.75 lakhs out of which, deducting the petitioner's share value of Rs.18,75,000/-, the petitioner agreed to pay Rs.56,25,000/- jointly to the respondents in which a sum of Rs.30 lakhs is payable before 11.6.1998 and the balance amount of Rs.26,25,000/- is payable within six months thereafter, ie., on before 11.12.1998 and on payment of the first instalment of Rs.30 lakhs within 11.6.1998, the other partners should relinquish their right in the partnership in favour of the petitioner and the petition should furnish his personal property as security for the payment of balance amount to the respondents. The written undertaking containing the said terms given by the petitioner was kept by Shanmugam, Advocate of Pollachi, and the xerox copy was given to each of the partners. Though Shanmugam died, the original undertaking was with the other mediator M.Loganathan, Auditor, Pollachi. The petitioner did not pay Rs.30 lakhs within 11.6.1998 as well the balance amount of Rs.26,25,000/- before 11.12.1998. In the months of August and September 2000, fresh certificates and licences were granted by the State and Central Government to the previous firm consisting of the petitioner and the respondents to start business and, therefore,it was felt among the partners that if the business is sold as an active and growing concern, it will fetch more price than when it is sold as a defunct and on that basis, the factory is being run for the past 5 months by all the partners jointly. Therefore, the agreement dated 12.12.1997 has become null and void. It is denied that the petitioner has invested Rs.22 lakhs. After the agreement dated 12.12.1997, all the partners jointly paid the dues owned by the firm to the Government. The petitioner sold some of the old machines and installed new ones in the factory for which purpose, he might have invested some money. The area of about 2-1/2 acres surrounding the factory has got site value and is worth more than a Crore of Rupees even in the year 1997. However, considering the relationship and as per the mediation, the respondents agreed to sell their share for Rs.56,25,000/- to the petitioner. The respondents 2 and 3 jointly issued notice to the petitioner and the first respondent dissolving the firm with effect from 15.3.2001. The Arbitration Clause mentioned in the Partnership Deed is applicable only during the continuancy of the partnership. So the petition is not maintainable.